FRANCHISING IN VIETNAM – A BRIEF ANALYSIS

Dated September 13, 2012

 

With the rapid economic development of Vietnam over the course of the past twenty five years, the rising disposable incomes of its ninety million citizens, rising domestic consumption, an emerging global perspective and the full implementation of the WTO Agreement in 2014, it is not difficult to see that Vietnam is now a key potential market for international franchises and global brands.  

The first foreign franchisors, such as Jollibee, KFC and Lotteria entered the Vietnam market in the late 1990s. Since then, a plethora of other famous international brands have been franchised on a large scale basis throughout Vietnam, including, Gloria Jeans, Bread Talk, Subway plus many Vietnamese brands such as Pho 24, Wrap & Roll and Trung Nguyen Coffee. Looking forward, recent press releases indicate that many more high profile high street names will soon be entering the Vietnam market. 

The laws relating to franchising in Vietnam have been officially in force under the Law on Commerce which took effect as of 01 January 2006. After that, Decree 35/2006/ND-CP of the Government dated 31 March, 2006 was issued to complete the legal framework for franchising activities.

Pursuant to these laws, both franchisors and franchisees must to satisfy legitimate conditions to be eligible for granting or receiving a franchise in Vietnam. The key eligibility requirements are as follows:

(i) The business system intended for franchise has been in operation for at least one year. Where a Vietnamese trader is the primary franchisee of a foreign franchisor, such Vietnamese trader must conduct business by mode of franchising for at least one year in Vietnam before sub-franchising;

(ii) The goods/ services subject to the franchise must not be those in which business is prohibited, restricted, and subject to further conditions;and

(iii) A trader shall be permitted to receive commercial rights when having the registration of business lines subject to commercial rights.

One only needs to take a cycle ride through the streets of Ho Chi Minh City to acknowledge an already significant array of global brands so much so that a shopping experience in Vietnam resembles more and more a shopping experience in any major European city.

One only needs to take a cycle ride through the streets of Ho Chi Minh City to acknowledge an already significant array of global brands so much so that a shopping experience in Vietnam resembles more and more a shopping experience in any major European city.

Written By Ms Dinh Nhat Mai Dao

Limcharoen Hughes & Glanville (Ho Chi Minh City)

Source: VIETSF